- Political stability
- Fiscal affairs
- Monetary policy
- Regulated markets
- Privatisation
- Macroeconomic developments
submited on 29.06.2012 in category Regulated markets | Fiscal affairs | Privatisation | Political stability | Monetary policy | Macroeconomic developments
Industry Watch distributed among its subscribers the regular report “Personal Assets in Bulgaria: Financial wealth and housing market”. Here are some of the highlights of the report.
During fragile post-crisis economic recovery in Bulgaria in line with even more real possibility of a recession in the Eurozone in 2012, the financial wealth of Bulgarians increased steadily – by some 12% y-o-y up to BGN 45 billion as of end – Q1 2012.
One of the reasons for the rapid growth of financial assets of the population is the relatively high yield (at least compared to other European countries), which households receive on their bank deposits, constituting some 70% of the household financial portfolio, as the annual effective interest rate on deposits remains above 4%.
A more noticeable increase of consumption and simultaneous reduction of the propensity of households to save can be expected only after a recovery of the labor market takes place, which is unlikely to happen before the end of 2012. The employment is still contracting, while the unemployment remains in the double-digit range.
Due to the decline of prices, housing wealth of the population kept on falling – by 4% y-o-y in Q1 2012, down to BGN 95 billion.
Housing wealth is not evenly distributed across the country – 31% of it is in Sofia, 11% in Varna, 7% in Plovdiv, 4% in Stara Zagora and 37% in the remaining cities (Please, see the map: Darker color indicates higher value of housing wealth in the corresponding district).
Hence, the aggregate (financial and housing) wealth of the population amounted to BGN 140 billion as of end - March 2012, having risen by 1% in the last 12 months.
On the whole, the number of concluded real estate transactions grew despite the visible reduction of registered mortgages and the decline of the volume of newly granted mortgage loans. Housing prices are probably close to bottom, but a new strong upward impulse could be expected only after recovery of credit activity and/or resurgence of fresh foreign capital inflows in the country.